Finance & Enjoyment Blog

Popular business press, from the Wall Street Journal, various cable news networks, other business magazines and websites; frequently publish stories about newly discovered cases of financial fraud relating to or carried out by using computers. KKB would like to increase awareness of these problems and aid in devising controls to prevent them or reduce the damage they can cause to your company.

A computer crime is the manipulation of a computer or computer-generated data to dishonestly obtain something of value for personal gain, or to cause loss. Statement on Auditing Standards No. 99: Consideration of Fraud in a Financial Statement Audit (SAS 99) defines fraudulent financial reporting as, the “intentional falsification of accounting records,” whereas some financial fraud instead involves the “intentional misappropriation of assets.” This is also known as “cooking the books.” This may be done with or without the knowledge of the managers of the business.

What are some fraudulent activities that may lead to computer crime?  Some examples are: 1) Modification, copying or destruction of software or data, 2) Theft of time or money by altering computer records, or the lack thereof, 3) The intent to illegally obtain information or tangible property through use of the computer, 4) Theft, vandalism or destruction of computer hardware, and 5). Obtaining unauthorized access to a computer through passwords or other login information by an unapproved user.

Computer abuse is the unauthorized use of, or access to, a computer, for purposes contrary to the wishes of the owner of the computer. Computer abusers receive intangible gains from their activities for reasons such as revenge, enjoyment or peer recognition. Abusers’ activities may not necessarily involve direct theft or damage, but damage companies’ losses in terms of time, reputation, etc. which are more difficult to identify and quantify. One such activity is a computer virus, which is characterized by its ability to spread itself quickly from computer to computer and eventually destroy data or software, or disrupt system activities. A computer worm acts somewhat differently in that it replicates itself, filling available memory and/or storage to bring systems gradually to a halt. Employees sometimes inadvertently download unauthorized items or open e-mails of unknown senders that contain computer worms.

Computer crime and fraud statistics are assumed by law enforcement to be vastly under-reported. The primary reason for this is that most computer-related crimes are not even detected. Computer systems can be protected from most crime and fraud. KKB can assist in controlling companies’ financial resources by creating and providing process controls over these resources.

A company’s information is generally one of its primary assets, even when it is not listed on the balance sheet. Protection of computer information warrants strong controls just as much as other business assets.

Let us remember that computers do not commit crimes
 


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